Time for Employers to Amend their Confidentiality and Non-Compete Agreements

With the recent passage of the Defense of Trade Secrets Act (DTSA), all employers need to take another look at their confidentiality and non-compete agreements. On the one hand, the DTSA now provides a federal cause of action for misappropriation of trade secret claims with more equitable relief along with compensatory damages, punitive damages, and attorney’s fees. On the other hand, it grants immunity to employees (and contractors) who make a disclosure of a trade secret/confidential information to a government official or an attorney solely for the purpose of reporting or investigating suspected unlawful conduct. In other words, and stated generally, an employee can take your company’s trade secrets/confidential information if their purpose in doing so is to report your company’s alleged misconduct.

In addition, the employer must provide notice of this immunity to its employees (and contractors) in their confidentiality and non-compete agreements or the agreement can cross-reference another policy document provided to the employee or contractor that addresses the notice requirements of the DTSA. This notification requirement applies to agreements entered into or amended after the enactment of the DTSA. The failure of the employer to include the required notice provision, will limit the legal remedies available to the employer if an employer determines that, in fact, an employee has misappropriated the employer’s trade secrets/ confidential information.

All businesses who use confidentiality and/or non-compete agreements should immediately consult with an employment attorney to discuss amending their current agreements.

Disclaimer: The content of this blog is intended for informational purposes only. It is not intended to solicit business or to provide legal advice. Laws differ by state and jurisdiction. The information on this blog may not apply to every reader. You should not take any legal action based upon the information contained on this blog without first seeking professional counsel. Your use of the blog does not create an attorney-client relationship between you and Mirsky Law Group, LLC.

Location

Scott A. Mirsky is pleased to announce that he will be taking his practice to PaleyRothman as of March 4, 2019. Mr. Mirsky can be reached at the following address: